Center for Health Market Innovations (CHMI)

In Africa, insurance salespeople have long been analogous to used car salesmen in the US. Yet the need for health insurance in Africa is apparent. Out of pocket health spending pushes millions of families into poverty every year. Public facilities often lack the capacity needed to offer comprehensive healthcare, whilst the majority of the population lack the cashflow required to pay for the services offered by private healthcare facilities.

MicroEnsure provides over half a million people access to health insurance bundled through Microfinance Instruments and other group policies in India. Last year, they launched a pilot to sell microinsurance in Tanzania. In a 2-part blog series, CEO Richard Leftley shares challenges to creating a new market for health insurance.

Part 1: The Sale or MicroEnsure’s “Front Office”

Q: How did you design the Tanzanian insurance product?

A: Our initial market research indicated that our target clients were willing to pay up to $10 per year per family member for health insurance which was not enough to provide a comprehensive product. So we conducted research to ascertain which ailments were the most frequent in Tanzania and the cost of treating those ailments. We used databases from the World Health Organization as well as data from the Ministry of Health, but we also spent time with clinics and hospitals to get the clinicians’ perspective. We used the information on frequency and cost to design two products that could then be market tested using focus groups.

1. Narrow but deep: this product covered five ailments that were most common and allowed the family unlimited access to in and out-patient treatment only in relation to these five ailments.
2. Wide but shallow: this product provided a family with three out-patient vouchers and an in-patient cover with a monetary limit. There were no restrictions on ailments but the amount of care available was limited.

The majority told us they would rather have #1, unlimited access for treatment for the most common diseases. So the product we offer covers malaria, maternity (prenatal, delivery including C-section and post natal), diarrheal disease, pneumonia and acute respiratory infection, for both in and out patient visits. A policy covers a family of five people and costs TZ 60,000 ($40) per year for the family.

Q: If health insurance is so new in Tanzania, how do you market it?

A: The general public is really skeptical about insurance. Someone who is poor doesn’t see why they should pay up front for something—it seems mad! We address these perceptions by demonstrating to people that insurance pays out. We advertise how many claims we’ve paid. But it is easier to market life insurance—it’s much cheaper and easier to understand. I die and get $100. With health insurance, you have to explain that some things are not covered, here is your card, this is where you need to go for treatment, etc.

We spent a lot of time sitting under trees with people to understand their lives. They told us they trusted the church rather than the insurance company or the banks. Over 40 million Anglicans go to church across Africa. We decided to start selling this product through the Anglican Church based in Dar es Salaam and will sell a similar product to coffee farmers in Northern Tanzania starting in April. It will later be extended to other MFI’s and faith groups.

Q: Why did the church want to get involved with selling micro-insurance?

A: The church takes an interest in its members’ wellbeing, and it sees health insurance as a valuable commodity to offer. The Archbishop of the Anglican Church of Tanzania, Valentino Mokiwa, says it will allow people to seek professional medical advice, rather than purchasing medicines without a proper consultation.

Q: Does the church sell policies at services?

A: We trained a team of sales people who are already embedded in the Anglican parishes. After the sales period last year, we used the church as a temporary office. Our aim is to sign up 4,000 families during the initial pilot test before expanding to other parishes, other towns in Tanzania, other MFI’s and other faith based groups.

Q: How is the environment for insurance sales different in Tanzania from your experience in India?

A: In India the model has been group sales. We work with MFIs or workers groups and unions, often covering 10,000 or 100,000 families in one go which is a model that is much cheaper and gets to scale much faster. In Tanzania we did not have the luxury of an organised informal sector so had to go out and sell rather than work with existing groups. As a company we work with more than 63 MFIs in five countries. The biggest group is 5 million members, the smallest is 1500 members.

On the other hand, I was amazed how easily we could set up a fee for service within our network of hospitals in Dar. We negotiated maximum fees for 5 ailments. For outpatient and inpatient care, we agree that consultation and drugs should cost no more than a certain amount.

Next up in part 2 of this interview: Building the infrastructure from scratch to carry risk and administer claims.